FTC Charges Against Direct Response, Inc. Upheld...

Court Orders Ban On Future Direct Mail Marketing

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A federal district court in Florida has permanently barred direct-mail marketers Scott and Linda Wilcox, and their firm, Direct Response, Inc., from any future direct-mail promotion or sales activity, after upholding Federal Trade Commission charges that their deceptive mail-order award promotion schemes bilked consumers out of more than $22 million. The Commission charged that the Wilcoxes' companies offered their mail-order victims valuable "prizes," "awards" and "free gifts" in return for small "fees." In fact, many consumers received nothing at all in return for the fees and others received awards of negligible value.

At the request of the FTC, in November 1993, the court issued an injunction temporarily barring the allegedly deceptive mail-order practices and prohibiting the defendants from selling or transferring their assets. Now, the court has permanently barred them from mail-order marketing and also has entered judgment against the defendants for $22.4 million, although the FTC said it is unclear what, if any, of that amount can be collected.

Scott and Linda Wilcox have done business under at least 14 different names, including Direct Response, Inc., which is based in Ft. Lauderdale. The court found that they mailed their solicitations to at least 50 million consumers over a three-year period.

According to the FTC complaint detailing the charges, the defendants' consumer scams fell into two general categories. In their "holding money" solicitations, they used company names like, "Bureau of Cash Rewards" or "Center for Refund Services" and notified consumers that they were holding a significant amount of money -- such as tax refunds or sweepstakes winnings to which the consumer was entitled. They cautioned that the money would be forfeited unless the consumers sent a small "claiming fee." But testimony presented in court established that hundreds of thousands of consumers responding to their mailings received nothing in return for their fee.

In their "guaranteed award" schemes, mailings by companies such as the "Award Notification Center" or "Gift Claim Center" notified customers that they had been selected to receive valuable awards, prizes or free gifts which would be sent on receipt of a small processing fee. In fact, the FTC charged, most received nothing and others received awards of negligible value.

In the final judgment issued by the court Sept. 29, and announced today, the court granted a permanent injunction prohibiting the Wilcoxes from any involvement, direct or indirect, in the development, marketing or sale of any promotion by direct mail and has directed a receiver to liquidate assets to maximize the amount of funds available for consumer redress. In addition, the court enjoined the defendants from making any misrepresentation when they market promotions or sell products or services other than by direct mail.

Funds collected on the judgment will be distributed to victimized consumers under a plan approved and administered under court order.

The FTC received assistance in this case from the Ft. Lauderdale Police Department, the Florida State Attorney and various other state agencies, the Office of the U.S. Attorney for the Southern District of Florida and the U.S. Postal Inspection Service.

Copies of the complaint, other documents related to this case, and two FTC consumer fact sheets, "Sweepstakes Scams: When "Winners" Lose Money," and "Prize Offers," are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202- 326-2222; TTY for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC"s World Wide Web site at: http://www.ftc.gov


(FTC File No. 932 3161)
(Civil Action No. 93-6913-CIV-Ferguson)

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